Will New Zealand be the first developed country to evolve a steady-state economy?

Posted on January 11, 2012 by admin

Jack Santa Barbara

New Zealand will inevitably make a transition to a steady-state economy. The onset of energy descent — having less and less energy to use with each passing decade — will push it to do so sooner rather than later. The critical question is whether the transition to a steady-state economy will be by design or disaster.

It is a safe prediction that New Zealand will eventually develop a steady-state economy, one characterised by stable or mildly fluctuating levels in population and consumption of energy and materials, with birth rates on par with death rates, and production on par with depreciation, all within levels of material throughput that do not exceed ecological limits.[1]

This is the inevitable outcome for all nations whether they set this goal or not. The reality of a steady-state economy will be determined in the end by non-negotiable natural laws rather than government edicts. How well human needs will be met in this process will be determined by whether we accept the challenge of ensuring our policies and practices are compatible with these natural laws. If they are, we have some chance of evolving a desirable steady-state economy that meets human needs into the foreseeable future — the good design scenario. If we continue policies which violate these natural laws we will also get to a steady-state economy — but one which is so degraded that it provides little output for human wellbeing — the disaster scenario.

Human civilisation’s current economic growth paradigm is unsustainable and headed for the disaster option. Our economic activities are totally dependent on the global ecosystems they are currently destroying. Governments may delay the disaster scenario with inadequate “green initiatives”, but only at the cost of yet more life-supporting ecosystems and the human carrying capacity of Mother Earth. The critical question is whether the transition to a steady-state economy will be by design or disaster.

As a “developed” country, New Zealand is highly dependent on fossil fuels for its economy: international tourism, the production and export of food and timber, domestic transportation, agriculture and housing. New Zealand’s economy will change dramatically as it loses access, whether through geologic depletion or market exclusion, to relatively cheap hydrocarbon energy. Energy is key to a sustainable and just society.

New Zealand’s geographic isolation will be a major factor in its experience of energy descent. A relatively small market at the far end of the energy supply chain, New Zealand is particularly vulnerable to both reduced supplies and high energy prices — one of the easiest customers to drop in favour of larger, closer and more lucrative markets. A market-driven energy decline could be both unexpected and abrupt.

A serious danger is that New Zealand will increase its foreign debt to maintain energy and other vital supplies. The ensuing debt slavery would quickly erode the nation’s autonomy and accelerate the depletion of its natural resources. New Zealand’s natural endowments may attract imperial powers willing to use both economic and military advantages to secure its resources for their own use. This “disaster” path to a steady-state economy will enrich a few in the short term but devastate New Zealand’s land, impoverish its people and ensure a bleak future for generations to come. Unless it is challenged, the current growth-oriented political mindset, influenced as it is by wealthy vested interests, will see this course vigorously pursued.

There is an exciting and inspiring alternative to this negative scenario: New Zealand appreciates that it will be the first developed country to seriously suffer from energy descent and prepares accordingly. New Zealand has a unique opportunity to provide global leadership in the transition to a steady-state economy unfolding by design rather than disaster.

If New Zealand is to make the transition to a culture and economy that is ecologically sustainable, socially just, healthy and invigorating, it will need to dramatically change the structure of its economy. Instead of exporting natural resources, it will need to export practical sustainability knowledge and expertise for all facets of an energy-descent economy — an expertise likely to be in high demand as the world wakes up to the impending crises ahead.

Self-protection is another reason for New Zealand to make the transition. As the world’s impending climate, economic and social crises unfold, a business-as-usual New Zealand will attract climate refugees and wealthy security-seekers, hastening the destruction of our ecosystems. Setting a national goal of transitioning to a steady-state economy would attract instead those eager and able to contribute to such a transition.

Becoming a unique global resource for practical sustainability education and consulting may afford New Zealand international protection and its best chance of retaining its sovereignty and controlling its own destiny. Can New Zealand make this transition to a steady-state economy? And what would it take to do so?

New Zealand has many advantages over other nations in terms of becoming a leader in practical sustainability:

The capacity to feed itself (although it currently imports about half its food)

Geographical isolation from most population centres, making mass migration difficult

A small population relative to the biocapacity [2] of its land

A climate likely to be less affected by climate change than that of many highly populated areas

A minimal number of large cities obliged to undergo radical adaptations in the face of global change

Many small rural communities that could be expanded and redesigned to be sustainable

Traditional frugality and practicality, still flourishing in much of the population

A residual core of knowledge and skills required to restart essential local industries

A literate and well-educated population with access to technical training facilities

A tradition of parliamentary democracy helping to facilitate the increased levels of cooperation required for various groups to contribute to the transition.

A strategy also requires an honest assessment of liabilities. Some of the obstacles to such a new vision for New Zealand include:

A widespread commitment to economic growth which has been responsible for the crises New Zealanders now face (New Zealanders have all benefited from this economic model and a new paradigm will challenge some basic beliefs about what constitutes the good life — for example, the role of material goods for wellbeing; the efficiency and innovativeness of corporations; the possibility of a highly industrialized economy.)

Some vested interests intensely committed to maintaining the growth paradigm as it gives them considerable power (for example, some politicians and the elites that have undue influence over them)

International pressures to provide for needs abroad, such as food, coal and immigration

The nation’s current foreign debt and any additional debt it takes on

Uncertainty about the magnitude and timing of the impending crises on New Zealand (This makes planning difficult as planning at leisure is different from planning on the brink of disaster and New Zealand has little way of knowing how close it is to the latter.)

The possibility that the rate and magnitude of changes coming will overwhelm people and push the country to a disaster steady state faster than it can manage a transition that allows it to optimise its physical and social resources

Inertia and despair as a result of coming to understand the profound harm humans have collectively done to Mother Earth and the extent of change required for a healthy, sustainable future.

Daunting as the challenges may be, New Zealand has little choice but to eagerly and earnestly take them on, as the longer they are left the more difficult it will be as the country’s options diminish.

No developed country has yet made the transition to a steady-state economy. What might such an economy look like, and what kinds of policy initiatives would be required to move in that direction?

The rationale for such an economy and how it might function has been outlined by the Centre for the Advancement of a Steady State Economy.[3] All of the policy initiatives identified have already been used in one jurisdiction or another, but they have not yet been integrated into a policy suite specifically designed to transition to a steady-state economy. An economic simulation in Canada has demonstrated that an industrialised economy without growth can lead to many benefits: high employment, no inflation, poverty reduction — even meeting Kyoto GHG emission targets.[4]

A similar exploration of the implications for the New Zealand economy is currently being sponsored by Sustainable Aotearoa New Zealand (SANZ). SANZ has also developed a comprehensive set of national goals for a strong sustainability[5] scenario for New Zealand, taking into account the profound changes that will flow from a significant decline in energy availability over the coming decades.

Currently, the average New Zealander uses the energy equivalent of several dozen “energy slaves” — the energy output of an average person on a 24/7 basis. Without fossil fuels this level of use cannot continue, not even with a combination of renewable energy sources — the only ones which are sustainable.[6] Consequently, as fossil fuels decline there will be massive changes to more animal and human power, as well as renewables, to meet basic necessities.

Food is our most basic energy source. Food production will require many more hands and a programme of re-ruralisation to bring people and production sites together. Other basic items — clothing, furniture and tools — will also need to be made locally. The more skilled labour that can be applied to these tasks, the more effectively and efficiently this can be done. So the questions become: what work is most essential for human wellbeing? How do people obtain the skills to succeed at this work? And how do people get distributed to where the work is (in rural areas, for example)?

The traditional Kiwi is multiskilled and practical. But with less energy available per capita, New Zealanders will have to stretch their creativity and relearn skills relating to simpler and more durable technologies. There will be many fewer white- and pink-collar jobs, more manual labour, more use of animals for work and transport. Relocating human infrastructure as a result of rising sea levels will affect much of New Zealand. Continuing to build infrastructure in areas of risk is a waste of increasingly precious resources.

An energy descent perspective recognises that the industrialised model of civilisation will eventually disappear. Without fossil fuels, much of industrial production will significantly decline. Our global culture based on a “mining” paradigm needs to be transformed to optimise a sustainable harvesting culture. Whatever remaining industrial production and goods we can muster need to be directed to this end. Simply prolonging industrial culture for its own sake will leave future generations with much less to harvest.

Learning to provide locally for necessities will be crucial. Business models will change dramatically as business becomes localised. Local community firms will become more environmentally sensitive, rating environmental impact over efficiency as they adopt sustainable business processes.

The idea that large corporations can or should continue is questionable. Large corporations suck in resources from afar, for the benefit of the few and the detriment of the many. In less than a decade there will be less than half the petroleum currently available from conventional sources. Less and less energy will actually be available to do work other than to extract more energy. The only kinds of corporations able to continue working in this environment may be state-controlled ones. There is considerable danger that only the privileged few will have access to state- or corporate-controlled goods and services.

Healthy market competition involves many small producers, none of whom can set prices or make excessive profits. The subsidiarity [7] principle suggests that firms should be local or regional unless a larger scale is required. Corporations for specific purposes that cannot be met by small local or regional firms may emerge if there are essential goods or services that require some very specialised inputs or economies of scale. Such enterprises will likely be few and far between and could be versions of the temporary corporations originally established a few centuries ago to spread risk and dissolved as soon as the projects were completed. Different corporate structures such as cooperatives or employee-owned businesses may also be desirable.

Trade rules need to change. Sustainable trade requires that trade should occur only if a region is not exporting biocapacity required for its own basic needs; similarly, imports should occur only if they are not depleting biocapacity needed in the region where the goods are produced. Learning to live within the biocapacity of one’s region will become essential.

For New Zealand this means a complete review of its export model to ensure that biocapacity ceases to be exported and degraded. Forestry currently degrades soil, dairy farming degrades water and stock production degrades both. New Zealand’s current biocapacity excess will shrink as Kiwis living abroad return home and new immigrants arrive. Preserving this excess will be an increasing challenge; continuing its current export model will bring New Zealand to a biocapacity deficit.

To continue exporting non-renewable resources to raise revenue is self-defeating, because New Zealand will never again have access to resources it trades away. Retaining resources provides greater security than fiat currencies vulnerable to national or global financial market collapse. Above all, land, water and ecosystems should not be destroyed to extract non-renewable resources for profit or economic growth. Energy descent requires that New Zealand become much more self-sufficient.

Energy descent will impact governments dramatically. Less energy means less economic growth, less government revenue and fewer government support services. The unravelling of the global economy is already evident in the rising national debt and widening austerity programmes of several nations.

Crises increase the risk of more authoritarian governments, the shrinking of individual freedoms and the confiscation of resources for the use of the elite few. In the aftermath of Christchurch’s 2011 earthquake, for example, the New Zealand parliament passed legislation waiving individual ministers’ accountability to parliament.[8] Could such powers be continued or extended to confiscation of public and private resources in times of “national emergencies”, however defined?

Strategies for change which focus exclusively on politicians and the media will miss the real power centres which have the capacity to make, or obstruct, the kinds of radical changes needed — the largely invisible oligarchy.[9] An effective change strategy must include a focus on identifying who they are, how they operate, how they disproportionately benefit from the existing growth paradigm and how they are disproportionately responsible for many of the ills this paradigm has wrought on Mother Earth.[10] While New Zealanders support and benefit from the current growth paradigm in many ways, the oligarchs ensure that policies are in place to make it continue and expand — they are the only ones who have the influence to make, or obstruct, significant changes as rapidly as needed.

It is prudent, given the uncertainty about the timing and magnitude of impending changes, to adopt a risk management approach — to assume that significant change can be rapid and to be as prepared as possible as soon as possible. The majority of New Zealanders is in denial about the nature and scale of the problems the country faces. When crises hit the majority, people will need massive support. Preparing stores of essential resources such as food and water, along with a capacity to teach the basic skills people will need to survive and thrive, would be both prudent and helpful.

To prepare is to take significant steps toward a sustainable lifestyle — such as participating in a Transition Towns initiative [11] or starting an ecovillage.[12] Such actions would: 1) offer some security for a family; 2) provide a secure setting from which to continue broader work on a steady state economy; 3) constitute an example for others to follow or at least learn from; 4) lighten the burden on ecosystems. Bold actions will be noted — ‘being the change we wish to see’ can be a powerful and inspiring motivator. Conferences and books are useful only insofar as they lead to action toward strong sustainability and a steady state economy.

The significant changes all New Zealanders need to make will not be easy. But the most important changes are under personal control, for they are internal — for example, where to place priorities and where to expect our genuine happiness, wellbeing and security to come from. Both planning and monitoring progress in this transition requires a focus on meeting universal human needs: survival (food, water, shelter), comfort or freedom from drudgery, freedom (of association, beliefs and expression), and identity (language, religion and ethnicity).[13]

For fellow New Zealanders: however challenging the path ahead, it will be joyous and satisfying to work with other like-minded families and communities to ensure our collective survival and wellbeing. We know what has to be done — let’s do whatever aspects are in our power, now.

Strong sustainability is defined and described in Strong Sustainability for New Zealand: Principles and Scenarios, published by Sustainable Aotearoa New Zealand Inc (SANZ) (2009), Nakedize Limited publication. See also the SANZ website www.phase2.org

See Heinberg, R. (2009) Searching For a Miracle: Net Energy Limits and the Fate of Industrial Society. Forum on Globalisation and The Post Carbon Institute.

Subsidiarity is an organising principle that matters ought to be handled by the smallest, lowest or least-centralised competent authority. This is the level with the most intimate knowledge of the situation, the level with the greatest interest in the issues, and the level most likely to be affected by the issues.

7 Comments

Kevin Baker7 years ago

The most comprehensive and articulate statement on the reality of our current situation in my view as an immigrant from UK that I have come across. The choice is clear and history indicates as W.H.Auden wrote: “We would rather be ruined than changed. We would rather die in our dread than climb the cross of the present and let our illusions die.” How do we shift this pattern? Our challenge and task unfolds. Thankyou so much. I shall pass this article on to our Mayor and MP (for what that’s worth.)

I write from Tasmania which shares many of NZ’s sociological, economic and demographic attributes and challenges.

KS7 years ago

Would you like to do an interview on this article, Jack? I’m guest hosting on PRN on Tuesday. Contact me for more information.

arandar7 years ago

Excellent indeed.

Worth as wide a distribution as possible. I’ll link as many as I can to it.

Jens Meder7 years ago

Yes, a “steady state economy” seems to be inevitable eventually, when we are unable to raise our consumption due to lack of say affordably priced energy.
Up to now, many of us still believe investment in science will help to keep civilization at a prosperous level – and would not one obviously helping factor be also population reduction, at a higher savings rate and capital ownership per person?
Or – what other practical policy proposals are there to initiate movement towards the “steady state economy”?

Bleep7 years ago

I doubt that New Zealand will be any different to most developed countries; as long as the status quo remains very few will make significant changes voluntarily. The same can be said for government.

WideAngleVision7 years ago

The New Plymouth area alone has enough energy to last so far into the future that this kind of fear mongering analysis is worthless, to say nothing of the other discovered but untapped on and offshore sources.
Jack should be looking at solutions for improving our standard of living such as backyard nuclear power stations rather than looking back to the 19th century.